Factoring: Accounts Receivable, Cash Flow and Factoring Invoice

If you own a flourishing business, you are probably aware of the importance of factoring invoices. The expression 'factoring invoices' sounds ubiquitous but what exactly does it mean and is it useful? These questions frequently cause confusion, but factoring invoices is easy to understand.

Factoring is the exchange of a company's commercial invoices or accounts receivable into immediate cash. This is done by selling those accounts at a discount. With invoice factoring, you can easily get 70 to 80% of an invoice's face value wired to your account within 24 to 48 hours of the invoice being issued and approved. It's an easy way to get ready cash.

There is a misconception that invoice factoring is a kind of loan. This is absolutely wrong, as with factoring you pay neither interest nor principal. Invoice factoring is not a loan. The main benefit of invoice factoring is that no liability will appear on a company's balance sheet due to factoring; furthermore, it financially revitalizes the business.

In invoice factoring, a company sells one of its assets or accounts receivable for an agreed-upon 'fee' to obtain a more liquid asset, cash. In short, it is a kind of self-financing, having its own growth with debt-free funding; it is like selling your vehicle to someone- the two of you agree on a price and the transaction is finalized.

As factoring invoices is not a loan, funding is not based on a company's ability to repay the amount advanced, but on the ability of the company's customers to pay what is owed the company for the purchase of its goods or services. Nowadays people prefer account receivable factoring over other traditional funding sources which usually require all the assets available to a company for collateral on a credit line. Factoring is a Receivables-based credit line that needs no other collateral.

The main highlight of {a rel="nofollow" href= http://www.magfinancial.com/factoring.cfm}invoice factoring is that you can have cash on demand to meet seasonal demands or accommodate new and larger clients who may demand longer terms or use up any excess working capital you have on hand. In short, factoring invoices gives you the option of offering terms to your customers, thus helping you increase your customer base.

If you are looking for a company that can help you with invoice factoring or that can provide you with more information on {a rel="nofollow" href= http://www.magfinancial.com/factoring.cfm}receivables factoring, account receivable factoring and factoring invoices please visit {a rel="nofollow" href= http://www.magfinancial.com/}www.magfinancial.com.

Invoice Factoring: Cash Now, No Waiting, NO Debt... Your competitor is doing it, Are you?

What are Your costs for NOT Factoring?

Consider the time value of money and the benefits of improved cash flow to your business. By having, cash for your invoices within 24 hours are you able to pay your suppliers faster and receive better discounts. Are you able to fulfill your next order to XYZ Company and make payroll without tapping your line of credit at the bank? Can you offer longer terms to larger customers and attract more business? Can improved cash flow help your business grow or survive without incurring more debt at the bank? Can the financial benefits of improved cash flow to your business offset the fees of Factoring, and then some? Sure it can, the savings alone in taking discounts from your vendors can equal the cost of Factoring. All the other savings are in your pocket! Factoring is a smart business decision. Why are you doing it?

Is Cash needed immediately for growth or survival?

Is long billing cycles putting a strain on your business cash flow? Despite increasing sales, does the management of receivables and payables seem like a juggling act? Could your business increase sales by offering better terms to your new and larger customers? Are you spending too much time collecting from slow paying customers and not enough time building your business? Is your bank turning you down for traditional financing due to years in business, profitability, lack of assets, personal guarantees or financial strength?

Have you considered turning away new business due to slow cash flow?

These are challenges many businesses face that can be solved with Factoring.

Benefits of Factoring Receivables

Simplicity

The advanced funding you receive for your receivables and the discount fees you will pay are based solely on the financial strength and credit worthiness of your customers, not your business!

You receive Cash for your unpaid accounts receivable invoices. Usually the factoring company buys the invoice from you for an amount less than its actual face value (70-90%). When the Factor later collects the full amount of the invoice from your client, you will receive the remainder of the advance less the factoring fee (discount rate). Fees will vary depending on the total dollar amount you intend to factor on a monthly basis.

Flexibility

Need a flexible financial solution that can help your business be more competitive while improving your cash flow, credit rating, and supplier discounts? Factor as much as your want or as little as you want. You decide. No obligations. There are No minimums and No maximums in the amount you can factor. No binding contracts, if that is what you want.

Unlike traditional bank financing, factoring relies on the financial strength and credit worthiness of your customers, not you. Here's why you should use Factoring services:

Offer Better Terms - Win More Business

With Factoring, you can attract more business by offering better terms on your invoices. Most companies negotiate on price to win business in a competitive market, but with Factoring, you can negotiate with terms instead of price.

To your customers, better terms can be more attractive than better prices.

When using attractive terms to win business, you can build the cost of factoring into your costs of good and services.

Example: A new customer may choose to do business with your company because you can offer NET 30 or NET 45 terms while your competitor (who isn't factoring) requires payment up front but has a 3% better price. If you factor the subsequent invoice at a discount of 3%, you have leveraged factoring services to win the business at no extra cost and improved your cash flow at the same time.

Improve Cash Flow* NO Additional Debt *WIN over customers

Your Business Receives:

* Get cash in 24 hours or less from your outstanding invoices! Eliminate long billing cycles.

* No new debt is created. Factoring is not a loan. This allows you to preserve your financial leverage to take on new debt. Improved credit rating.

* Purchase capital equipment to expand your business.

* Increase inventory for quicker shipments or handle seasonal inventory needs.

* Market for additional business.

* Take trade discounts. This alone can offset Factoring fees and all the other savings are gravy!

* Pay off nagging, expensive delinquent obligations.

* End payroll worries.

* Meet tax requirements on time. No more exhaustive penalty fees.

* Negotiate discount purchasing.

* Unlimited sales and profit potential.

You Receive:

*Cash stability

*Simple to start and use

*You keep control

* Reduce stress, improve planning, focus on what is critical to make money.

Customer Credit Services:

*Reduce bad debt expense, work with experts at collecting.

* Streamline credit approvals for new customers.

* Improve decision-making on new business.

* Reduce administration costs: long distance calls for collection and credit investigation, postage, staff, monthly statements and more.

* Larger customer credit lines and better terms, which increase sales.

* As you grow, your payroll budget for credit and collection department is minimal.

Accounts Receivable Management:

* Reduce administrative costs. Factor will post invoices and apply cash applications.

* Improve customer relationships. You are no longer the bad guy looking for payment.

* Improve receivable turns. Fact: Customers pay Factors before independent businesses.

* Improve accounting performance; timely reports, online access and more.

* Redirect your critical resources to marketing and production

If you are looking to receive an increase in cash flow and increase your bottom line profits, you need to factor your invoices now!

Please feel free to reprint this article as long as it is left intact and all links are hyperlinked.

www.brtfinancial.com/arecfac.htm

BRT Financial specializes in Invoice Factoring; it gets you the cash you need now! Factor as many invoices as you need! Invoice Factoring will provide the cash flow you need to increase your bottom line profits!

www.brtfinancial.com/arecfac.htm

www.brtfinancial.comInvoice Factoring: Cash Now, No Waiting, NO Debt... Your competitor is doing it, Are you?

Invoice Factoring Financing for Small Businesses

Do you sell products or services to commercial or government customers? If you do, then you must be very familiar with having to wait 30, 40 or even 60 days to get paid by your clients.

Most large businesses can afford to wait. Unfortunately, few small business owners can afford to wait - and worse - most small business owners do not take into account that they will have to wait to get paid when they first start their businesses.

But what if you can't afford to wait 60 days to get paid? The best solution is to factor your invoices.

Factoring is a financial tool (similar to a line of credit) that eliminates waiting to get paid by your clients. Factoring financing provides you with money for your invoices, usually 24 hours after you submit them. It provides you with the necessary cash to pay rent, expenses and take on new opportunities.

Invoice factoring is an ideal tool for cash intensive businesses such as trucking, staffing, business services, medical offices and IT. It works as follows:

1. You deliver a product or a service and generate an invoice
2. You submit the invoice to your client and send a copy to the factoring company
3. The factoring company advances you up to 85% of your invoice
4. The remaining 15% is held as a reserve to cover charge backs and credits
5. Once your client pays the factor, the transaction is settled and the reserve is rebated (less a small fee)

And how much does factoring cost? It varies on your business volume, how long your clients take to pay and their credit worthiness. Most factors will charge a fee of anywhere between 1% and 2.3% for every 10 days that an invoice is outstanding. However, fees vary and can usually be customized to fit your needs.

The biggest difference between invoice factoring financing and a bank loan is that factoring is easy to obtain. Since the factor is financing your invoices, their biggest concern is that you do business with strong credit worthy businesses. This means that factoring is available to small and new businesses, provided that you have good clients. And as opposed to a bank, a factoring company will not ask you for endless financial reports and three years worth of audited financials.

About Commercial Capital LLC

Interested in factoring your invoices? We can provide you with a factoring and small business factoring financing. Call Marco Terry at (866) 730 1922 for a quote. Need more info? Go here to get factoring resources, freight bill factoring resources

Factoring is Good for Business

It seems you can never have enough money, and factoring is just one more way to meet that goal. The basic premise behind the business idea of factoring is that an owner sells his accounts receivable to get a quick influx of cash. The buyer gets the accounts receivable at less than their actual value. The pay off comes when the accounts are paid in full.

Factoring can be good for the business owner. The sell gives the owner some immediate working capital that would have trickled in otherwise. It also takes the hassle of collecting outstanding accounts out of the hands of the owner. The down side to factoring is that the owner will get less money for the accounts than they show on paper.

Most owners who look to factoring are trying to find a way to smooth out the cash flow and free up time. It basically comes down to a need for having the money now instead of later. The money is guaranteed at the sell of the accounts, and the business owner doesn’t have to spend time and resources trying to collect on accounts. Factoring also relieves the owner of concerns about bad debts. Collection is strictly in the hands of the buyer.

The buyer side of the factoring benefits because the accounts are purchased as much as 25% below their face value. This is a nice profit on a short term investment. It is also likely that a company interested in factoring has streamlined the collection process – making the process much more cost effective.

Factoring is not for every company, nor every investor. The best route for factoring is to find a company that specializes in this investment process and develop a relationship with it. It would also be wise to consult with an accountant to see if the process of factoring could be a money saving tool for your business.

Kathryn is a freelance journalist covering business and finance issues, specializing in subjects such as factoring and ecommerce.

Top 5 Factoring Companies

Because factoring is such an obscure function of small business, despite its popularity within the business world, it can be difficult to find the right factoring company to help you out. Getting the right bid, the right terms, and having the cash flow through your business seamlessly is a big deal if you want to concentrate on the big picture. As you probably know, the internet is a wealth of information for small business owners. With that in mind, consider the top 5 factoring companies you can find online.

The first of the top 5 factoring companies you can find online is a site called FactorBids.com. This site is good in that it allows you to submit an application that will result in about a dozen factors bidding on your application. You will get a response in about 3 business days. The site is very professional looking and is very user friendly. Like many other sites that allow financial institutes to bid on business, everything is negotiable with this. A factor can change its bid or even cancel the deal completely, but then again so can you with this site.

The second of the top 5 factoring companies online is getfactored.com. At this fast and user friendly website you will be able to get quotes from up to four factors with just one application. That saves you time, which is a hot commodity for small business owners. This site also has a sister site, FreightCash.com, that specializes in factoring for trucking business, so that is something to keep in mind as well.

In the top 5 factoring companies, the third site to consider is Factors.com. Despite having sponsors on the site, it does offer you a great deal of information. The site is essentially a directory of companies by the industry they serve. You simply find your industry and will then have access to a number of factoring companies that specialize in businesses with needs just like yours.

Fourth is cfa.com, the site for the commercial finance associate. As factoring companies go, this one will help you narrow your choices down to factors who are CFA members. That means they are reputable and safe for you and your business. The site is a little cumbersome, but the information is good and you will be able to find a factor that can help you quickly.

Fifth on the top 5 factoring companies is another information site that will lead you to reputable factors. Factoring.org is the home of the international factoring association (IFA). The site is great if you are informed about factoring, but there is not a lot of information for beginners. Since IFA members are bound by a code of ethics, you know the lenders on the site are going to be easy to work with.

Finding a factoring company can be hard. However, these five factoring companies will help you find the right factor to help with the financial side of your business. Each is worth your time and with just a few minutes of research you will find which of these top 5 factoring companies on the internet can help you find the right factor for you..

Stu Pearson has an interest in Finance & Business and Factoring Companies, for more FREE information and articles please visit Factoring Companies Resources